MUMBAI: In a first in the struggling asset reconstruction companies space, the oldest such entity, Arcil or Asset Reconstruction Company India, has filed the draft papers with Sebi for a primary issue seeking to mop up Rs 1,500 crore.
All the ARCs have been struggling after the insolvency and bankruptcy code became popular with lenders since July 2016. Since lenders are choosing the IBC route for large debt resolution, ARCs are now left with only retail assets, which typically do not go to the NCLTs for resolution. ARCs operate mostly with corporate loans and SME loans but the mainstay is retail loans. They earn revenue from management fees, recovery fees, investments, and write-backs.
Founded in 2002, Arcil, promoted by Avenue India Resurgence, which is an affiliate of Avenue Capital Group, and State Bank of India, which are identified as sponsors of the company under the Sarfaesi Act, is the country’s first asset reconstruction company and is currently among the largest private ARCs.
Though the press release did not specify the IPO size, i-banking sources told TNIE that the issue, which will be a pure offer for sale, will be in excess of Rs 1,500 crore.
Through the OFS, the selling shareholder will offer up to 10.5 crore shares with a face value of Rs 10 each.
The main selling shareholders are Avenue India Resurgence, which is an affiliate of Avenue Capital Group, offering up to 6.87 crore shares; State Bank of India selling up to 1.94 crore shares; Lathe Investment selling up to 1.62 crore shares and Federal Bank offering up to 10.35 lakh shares, according to the offer document.
According to recent data, Arcil has assets under management of Rs 15,230 crore and a net worth of Rs 2,462 crore, making it the second-largest by both metrics in the private ARC space.
It completed its first stressed asset acquisition in December 2003. As of March 2025, it had taken up 652 assets worth Rs 72,657.31 crore (at a cost of Rs 38,155.63 crore or 52.51% of the total principal debt) and made recoveries of Rs 28,459.7 crore from 199 cases, with 453 still open.
In FY24, the company was the second largest ARC by revenue from operations (excluding unrealized fair value changes) at Rs 570.14 crore and had the highest net profit as a percentage of average AUM at 1.94%, and the highest return on assets at 11.48%. It has a strong balance sheet with a net worth of Rs 2,767.8 crore.
During fiscals 2025, 2024 and 2023, it has acquired Rs 3975.87 crores, Rs 2,068.98 crore and Rs 4,288.96 crores of stressed assets, respectively, and the AUM was Rs 16,852.57 crore as of March 2025, Rs 15,230 crore as of March 2024 and Rs 16,223.48 crore as of March 2023.
According to a Crisil report, the stressed assets opportunity is shifting from corporate to non-corporate loans with the retail segment in particular experiencing rising stress levels. The overall outstanding amount under the retail segment (including housing loans, vehicle loans, consumer loans, credit cards, educational loans, and personal loans) has grown at an annual rate of 15.7% over the last five years from around Rs 32 trillion as of March 2020 to around Rs 67 trillion as of March 2025.
Total stress under the retail segment in banks and non-banks has increased from Rs 3,46,950 crore in fiscal 2020 to Rs 6,92,450 crores in fiscal 2025, an annual growth rate of 14.8%.
Arcil has focused on increasing the proportion of retail loans in its portfolio and as a result, its retail AUM has grown from Rs 1,559.10 crore in March 2023 to Rs 2,747.88 crore in March 2025, an annual growth rate of 20.79%.
For fiscal 2025, its revenue from operations stood at Rs 596.42 crores and total income stood at Rs 623.4 crore, while it earned a net income of Rs 355.32 crores with a net margin of 57%.
IIFL Capital Services, IDBI Capital Markets and JM Financial are the bankers to the issue.